Law governing franchise

Laws Governing Franchising in India

In the absence of a franchise-specific legislation in India, a franchise arrangement would be governed by various applicable statutory enactments prevailing in India. A gist of some important statutes is summarized as a brief overview. (I) Contract Law The contractual relationship between a franchisor and a franchisee would be governed  by the Indian ontract Act, !"#$. !"#$. In accordance with the Indian ontract Act, in order  to be a valid and binding contract, the %ranchise Agreement must fulfill the essentials of a vali valid d cont contra ract, ct, such such as& ther theree must must be some some lawf lawful ul cons consid idera erati tion on for for the the agreement, a lawful ob'ect and purpose and the parties should be capable of eecuting the contract (II) Intellectual Property Law In India, the primary laws governing intellectual property rights are the Trademars Act, !***, the opyright Act, !*+# and the esigns Act, $$. These legislation deal with the licensing of trade mars, copyright, systems, etc., from a franchisor to a franchi franchisee, see, for the purpos purposee of operati operating ng and conduc conductin ting g the franchi franchised sed busin business. ess. %urther, under these statutes, civil and criminal remedies are available to a franchisor  again against st infr infrin inge geme ment nt of inte intelle llect ctua uall prop propert erty y righ rights ts.. %or %or eam eampl ple, e, in case case of  infringement of a trade mar, civil remedies would be in the nature of an in'unction or  stay against the use of the trade mar and damages can also be claimed. (III) Real Estate Law In India, premises for conduct of the franchised business may be acuired either on ownership basis, or by way of a leave and license or lease arrangement or by way of a  business conducting arrangement. The Transfer of /roperty Act, !""$ and the various stat statee-en enac acte ted d legi legisl slat atio ion n on rent rentin ing g of immo immova vabl blee prop proper erti ties es gove govern rn thes thesee arrangements. Taxation Law (I0) Taxation

Taes in India are levied by the central, state and local government bodies. irect and indirect ta laws such as income ta, sales ta, additional ta, service ta etc. would  be relevant in a franchise arrangement, as they are in any other business concept. /ayment /ayment of taes would depend on the structure structure of the franchise arrangement arrangement and in the case of an international franchisor, the eistence of treaties between the countries. (0) Remedial and Penal Law; lternative lternative !ispute Resolution In case of any dispute or difference between the parties in respect of a franchise arrangement, civil and criminal remedies would be available to the aggrieved party in India. The aggrieved party may also initiate any of the alternate dispute resolution methods under the Arbitration and onciliation Act, !**1.

(0I) "ther pplica#le Law Any franchised business set up for sale of products or providing any services would have to comply with the applicable labour legislation in India. A consumer buying a  product or availing of a service under a franchise arrangement would be protected under the onsumer /rotection Act, !*"1. %urther, depending upon the industry2sector  to which the franchised business belongs, the establishment would be reuired to obtain certain specific approvals and registrations from different local governmental authorities. %or eample, a franchised outlet in the food industry reuires an eating house licence from the 3unicipal orporation and a health licence from the 4ealth epartment of the 3unicipal orporation. In case of an international franchise arrangement, the %oreign 5change 6egulations and the %oreign 5change 3anagement Act, !*** would be attracted.

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